The three main bailouts for Greece, Portugal and Ireland were
unprecedented in scale and character. The trio were each allowed to
borrow over 2,000pc of their allocated quota – more than three times the
normal limit – and accounted for 80pc of all lending by the fund
between 2011 and 2014.

The report said the whole
approach to the eurozone was characterised by “groupthink” and
intellectual capture.They had no fall-back plans on how to tackle a systemic crisis in the eurozone – or how to deal with the politics of a
multinational currency union – because they had ruled out any
possibility that it could happen.

“Before the launch of the euro, the IMF’s public statements tended to
emphasise the advantages of the common currency," it said. Some staff
members warned that the design of the euro was fundamentally flawed but
they were overruled.

“After a heated internal debate, the view supportive of what was
perceived to be Europe’s political project ultimately prevailed,” it
said.

“The
IMF remained upbeat about the soundness of the European banking system
and the quality of banking supervision in euro-area countries until
after the start of the global financial crisis in mid-2007. This lapse
was largely due to the IMF’s readiness to take the reassurances of
national and euro area authorities at face value,” it said.

The IMF persistently played down the risks posed by ballooning
current account deficits and the flood of capital pouring into the
eurozone periphery, and neglected the danger of a "sudden stop" in
capital flows.

“In a monetary union, the basics of debt dynamics change as countries
forgo monetary policy and exchange rate adjustment tools,” said the
report. This would be amplified by a “vicious feedback between banks and
sovereigns”, each taking the other down. That the IMF failed to
anticipate any of this was a serious scientific and professional
failure.

In Greece, the IMF violated its own cardinal rule by signing off on a
bailout in 2010 even though it could offer no assurance that the
package would bring the country’s debts under control or clear the way
for recovery, and many suspected from the start that it was doomed.

The organisation got around this by slipping through a radical change
in IMF rescue policy, allowing an exemption (since abolished) if there
was a risk of systemic contagion. “The board was not consulted or
informed,” it said. The directors discovered the bombshell “tucked into
the text” of the Greek package, but by then it was a fait accompli.

The IMF was in an invidious position when it was first drawn into the
Greek crisis. The Lehman crisis was still fresh. “There were concerns
that such a credit event could spread to other members of the euro area,
and more widely to a fragile global economy,” said the report.

The eurozone had no firewall against contagion, and its banks were
tottering. The European Central Bank had not yet stepped up to the plate
as lender of last resort. It was deemed too dangerous to push for a
debt restructuring in Greece.

While the fund’s actions were understandable in the white heat of the
crisis, the harsh truth is that the bailout sacrificed Greece in a
“holding action”to save the euro and north European banks.Greece
endured the traditional IMF shock of austerity, without the offsetting
IMF cure of debt relief and devaluation to restore viability.

A sub-report on the Greek saga said the country was forced to go
through a staggering squeeze, equal to 11pc of GDP over the first three
years. This set off a self-feeding downward spiral. The worse it became,
the more Greece was forced to cut – what ex-finance minister Yanis
Varoufakis called "fiscal water-boarding".

“The automatic stabilisers were not allowed to operate, thus
aggravating the pro-cyclicality of the fiscal policy, which exacerbated
the contraction,” said the report.

The attempt to force through an
"internal devaluation" of 20pc to 30pc by means of deflationary wage
cuts was self-defeating since it necessarily shrank the economic base
and sent the debt trajectory spiralling upwards. “A fundamental problem
was the inconsistency between attempting to regain price competitiveness
and simultaneously trying to reduce the debt to nominal GDP ratio,” it
said.

The IMF thought the fiscal multiplier was 0.5 when it may in reality
have been five times as high, given the fragility of the Greek system.
The result is that nominal GDP ended 25pc lower than the IMF’s
projections, and unemployment soared to 25pc instead of 15pc as
expected. “The magnitude of Greece’s growth forecast errors looks
extraordinary,” it said.

The strategy relied on forlorn hopes that the "confidence
fairy" would lift Greece out of this policy-induced nose-dive.

“Highly
optimistic” plans to raise $50bn from privatisation sales came to
little. Some assets did not even have clear legal ownership.

The chronic
“lack of realism” lasted until late 2011. By then the damage was done.

“If preventing international contagion was an essential concern, the
cost of its prevention should have been borne – at least in part – by
the international community as the prime beneficiary,” it said. Better late than never."

Comment: I identified with Greek citizens being attacked around the clock by the media for the benefit of bankers. In America's case, these attacks by the globalist political class and media have been ongoing for decades. You'd think it would be enough for them to have destroyed this country, destroyed lifetimes of work and sacrifice, but it's not. They insist on filling the air with their seething hatred of us, usually that we're racists and xenophobesfor wanting to have a country. (We don't have a country right now because we don't have a southern border. You can't be "xenophobic" about a country you don't even have). You'd even think they'd be happy that many impoverished Americans are quietly committing suicide these days, but no. They mock the dead for allegedly being stupid (white) hicks. In 2006, George W. Bush, called us racists for not wanting to give Arab governments control of our ports. (The failed Dubai Ports deal). It's 2016 now, so this has been going on for a long time. P.S. I'm familiar enough with Noam Chomsky that I wouldn't normally seek him out for inspiration. His words happened to be helpful in this case........